Florida completed a $1.2 billion in revenue bond sale on Feb. 8 issued by the State Board of Administration Finance Corporation, formerly known as the Florida Hurricane Catastrophe Fund (FHCF).
The fund is designed to help private insurers pay claims in the event of a major financial losses due to a hurricane making landfall in the state.
Moody’s Investment Service last month gave the bonds an Aa3 rating and affirmed the Aa3 rating on about $2 billion of outstanding parity debt. The outlook was stable.
The credit rating agency reasoned that the rating was appropriate because of the fund’s ability to levy emergency assessments on most property and strong bondholder protection.
“While FHCF has accumulated healthy cash balances after several years without major storms, Moody’s is cognizant of the risk that a very large storm could have unforeseen impacts on the state, policy holders, and bondholders,” analysts said in a report.
“Therefore, the rating is based on the overall strength of the assessment mechanism and less influenced by temporary fluctuations in liquidity.”
Standard & Poor’s Rating Agency raised the credit’s rating on the bonds to AA from AA- based in part on the consistent growth in the assessment base to $39 billion in 2014.
Sales of U.S. municipal bonds and notes are expected to jump to $9.09 billion next week, up from $5.37 billion the week prior, according to MMD.
(Reporting by Rory Carroll; Editing by Meredith Mazzilli)